Wall Street’s Ethical Dilemma
Wall Street is a bizarre place. It masquerades as a sober center of finance, but it operates as a wide-open bazaar of anything-goes gambling games.
Recently, the biggest casino player of them all, Goldman Sachs, made a bizarre effort to strike a sober public pose by imposing a new ethical standard on its bankers/gamblers. Were they instructed to stop rigging the game to profit themselves at the expense of everyone else? No, no, Nanette – Goldman never lets ethics get in the way of raking in more money. Rather, the bank’s sudden outburst of morality was directed at the language used by its bankers. Henceforth, decreed the higher-ups, Goldman employees must refrain from using profanity in their e-mails.
Sheesh – like it was expletive-filled e-mails that crashed our economy, not Wall Street banksters gaming the system!
Meanwhile, Goldman’s pious moralists have already plotted an end-run around new regulatory reforms that Congress passed in July. One of the most important reforms was a ban on what’s called “proprietary trading,” a convoluted form of casino gambling by bankers that led to Wall Street’s meltdown and America’s ongoing economic catastrophe. Goldman has simply had these proprietary traders change hats, moving them into its “asset management” division, which does not come under the new regulation. So – hocus-pocus! – the reckless gamblers slip through a definitional loophole and keep playing the same old game. This slick perversion of the law will be hugely profitable for the bank and hugely risky for our economy.
But at least we can take comfort in the fact that no profane e-mails were exchanged by Goldman’s ethically impaired bankers as they conspired to put themselves above the law. And they wonder why the phrase “Wall Street banker” is now an expletive in our country.
Big Banks’ Inside Job
Congress finally passed a moderate financial reform package to tighten regulations on the banksters of Wall Street. Of course, the banksters howled, protesting even the meekest of reforms – but the package is now the law, so that’s that. Right?
Uh … no.
What Congress passed is a 2,300-page compendium of concepts, leaving the real decision-making about the details of financial regulation in the hands of the Federal Reserve, the Securities Exchange Commission, the Commodity Futures Trading Commission, and other regulatory agencies. In other words, the game is still on for Wall Street lobbyists! So they’re presently mounting a furious blitz on the rule-writing regulators, still trying to weaken or even kill many of the reform ideas passed by Congress.
To weasel their way inside, the financial giants have reached into the agencies themselves to hire away nearly 150 regulators, luring them with fat salaries to switch sides and become industry lobbyists. These insiders-turned-outsiders are well worth the big bucks, for they have long, personal relationships with those in the agencies who are filling in the blanks left by Congress. If nothing else, these newly minted lobbyists are much more likely to get their phone calls returned by their former regulatory colleagues than a stranger would.
A New York Times reporter asked one of the switcheroos who’s now working for the dark side if he felt this old-buddy connection gave him a lobbying edge. This regulator-turned-lobbyist bluntly said, “If it didn’t, I wouldn’t be able to justify getting out of bed in the morning and charging the outrageous fees that we charge our clients, which they willingly pay.” He added that “you have to work at an agency to understand the culture and pressure points, and it helps to know the senior staff.”
If the Wall Street banksters are able to pull off this regulatory heist, you’ll know that it was an inside job.
This article appears in September 3 • 2010.